The Stans - Investment Opportunities and Political Pitfalls

By IBT Staff Reporter On 06/24/10 AT 1:47 PM

The former Soviet Central Asian republics are at a precarious crossroad today between accomplishing monumental progress, like Kazakhstan, and flirting with disaster and the prospects of civil war, like Kyrgyzstan.

Indeed, should the current pace of development continue, particularly in the field of oil and natural gas, of which new untapped sources are constantly being discovered, Kazakhstan, for one, shows the potential to overtake the oil-producing states of the Arabian Gulf within the next decade. But Kazakhstan, even if it still has a way to go before it attains full-fledged democracy as perceived by Western standards, is nevertheless, the success story par excellence in Central Asia.

I would rate the quality of freedom of the media in Kazakhstan as satisfactory. Especially when compared to other countries in the region, said Marsat Bashimov, editor of a law publication in Kazakhstan.

And rightfully so. The social-economic structure of Kazakhstan, as with other countries in the region differ greatly from that of Europe and North America. To succeed in the great experiment that is nation-building, the emerging democracies must be allowed to proceed at their own pace.

Still, there is serious concern that instability, such as the recent coup in Kyrgyzstan could upset the steady progress these five Central Asian republics have achieved --­ some more than others -- in the past 19 years since independence from the Soviet Union.

But some of the former Soviet republics are moving forward even though a number of observers in the region go as far as predicting another Afghanistan if the situation in Kyrgyzstan continues to deteriorate.

This fear, not entirely unjustified, stems from concerns that the revolution which unseated the government of President Kurmanbek Bakiyev in Kyrgyzstan earlier this year, could erupt into a larger conflict, if left unchecked.

The situation is even more explosive now that Mr. Bakiev has sought refuge in Belarus where he has found support from President Alexander Lukashenko. This latest round of political unsettlement in Kyrgyzstan is the third such change of government since the downfall of communism 18 years ago.

There is a real danger that Kyrgyzstan might turn into 'a second Afghanistan,' a lawless place which falls prey to terrorists, extremists, etc., said a high-ranking Kazakh official to this reporter on condition his name is not used.

Indeed, the coup in Bishkek sheds light on at least two different paths. First, as one former U.S. presidential candidate kept repeating, at the end of the day it's all about the economy. That tenet holds true for the United States as it does for the rest of the world: a stable economy will lay the foundation for a solid political base and a thriving and content populace.

The reverse is just as true. A dissatisfied public will eventually rise up as they have in Kyrgyzstan. This revolt has convinced Kazakh leaders that they, at least, have their priorities right. The Kazakhs have been repeating to anyone accusing them of not plowing ahead with democratic reforms fast enough that they prefer to give priority to the country's economy before moving ahead with greater reforms.

To much of the outside world there is a tendency to lump the five former Soviet republics of Central Asia, collectively and colloquially known in the West as the Stans, under a unified label: authoritative and unstable regimes where corruption is the only game in town and where the lack of democracy has been at the forefront of their relationship with the West.

The five countries, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, however, are in fact quite different in more ways than one, particularly when it comes to domestic politics and the economy.

During an earlier visit to Almaty several years ago the opposition held a press conference for visiting Western journalists and sent two mini-vans to transport the members of the media from their hotel to the venue. I asked members of the opposition how was it possible that they were able to pick us up at our hotel where dozens of secret policemen were milling about in the lobby. In most authoritative countries we would have been prohibited from getting in the vehicles. Somewhat taken aback, the member of the opposition shot back: My dear sir, this is Kazakhstan. It is not Uzbekistan, or Kyrgyzstan!

During his visit to Washington last April where he attended the Nuclear Summit, Kazakh President Nursultan Nazarbayev, was reminded at every opportunity by the U.S. leadership about his less-than-perfect track record on advancing democracy at home.

At a dinner given in his honor in Washington, Mr. Nazarbayev rebuffed accusations, pointing to what he says are priorities; fixing the economy and feeding his people. The last thing that anyone wants to see happen at this point is another Afghanistan to take root in Central Asia.

The people of Kazakhstan have largely given their support to their president, said a Western ambassador in Astana. It is a typical Kazakh tribal mentality. They have given their trust and support to the strongest man in the clan, said the ambassador.

This article was written by Claude Salhani for Oilprice.com who offer detailed analysis on Oil, alternative Energy, Commodities, http://oilprice.com/Finance/Economy/ target=new>Finance and Geopolitics. They also provide free Geopolitical intelligence to help investors gain a greater understanding of world events and the impact they have on certain regions and sectors. Visit: http://www.oilprice.com